Income Tax in 2024: Keep In Mind These Updates From Last Year For Tax Benefits

Changes in IT Rules in 2023: During the current year, there have been many important changes in the income tax rules of the country, which are important for every taxpayer to remember.
Tax Benefits, Income Tax Rules in 2023, Taxpayers, Tax
Tax Benefits, Income Tax Rules in 2023, Taxpayers, Tax

Income Tax Updates: In 2023, many important changes took place in income tax-related rules.

Every taxpayer needs to remember these tax updates. Even a single error can lead to big financial losses.

In the last Union Budget, Finance Minister Nirmala Sitharaman made many such announcements which impacted the income tax-related rules in India.

Let us discuss some of these changes which you should keep in mind in your investment and tax planning.

Income Tax Updates From Last Year For Tax Benefits

1. Automatic Selection of the New Income Tax Regime 

The new optional income tax regime introduced in the Union Budget for the financial year 2020-21 has been made the default IT regime from April 1, 2023.

That is, if you want to remain in the old income tax regime, then you will have to select it, otherwise, the new tax regime will automatically apply to you by default.

2. Tax Rebate Limit

Modi government increased the limit of tax rebates available under Section 87A from Rs 25,000 to Rs 7 lakh in the new tax regime from April 1, 2023.

This means that a person whose annual income is less than Rs 7 lakh will not be required to pay any income tax if the new tax regime is adopted.

Earlier, only those with annual income up to Rs 5 lakh could get the benefit of a tax rebate of Rs 12,500.

3. Standard Deduction in the New Tax Regime

There has been no change in the benefit of a standard deduction of Rs 50,000 available to employed people under the old tax regime.

But the Finance Minister announced to give the benefit of standard deduction to salaried people who choose the new tax regime from April 1, 2023.

Because of this, employed people will not have to pay any tax on annual salary up to Rs 7.50 lakh.

4. Tax Slab of New Tax Regime

The government has not made any changes in the tax slabs for the old tax regime but has announced new slabs and rates for the new tax regime, which are applicable from April 1, 2023. These slabs and rates are as follows:   

  • Annual income 0-3 lakh rupees: Nothing

  • Annual income Rs 3-6 lakh: 5%

  • Annual income Rs 6-9 lakh: 10%

  • Annual income Rs 9-12 lakh: 15%

  • Annual income Rs 12-15 lakh: 20%

5. On LTCG Tax Benefit

After April 1, 2023, income tax will have to be paid as per the slab rate on the income earned from investments in specified date mutual funds.

Long-Term Capital Gains (LTCG) tax benefits will not be available on this.  

Also, there will be no capital gains tax (LTCG Tax) on converting physical gold into electronic gold receipts (EGR) or converting EGR into physical gold.

This announcement made in the budget by Finance Minister Nirmala Sitharaman has come into effect from April 1, 2023.

6. Tax Rules Related to MLDs and Life Insurance Policy

After April 1, 2023, income from investments in Market Linked Debentures (MLDs) will be taxed as per the slab rate. Earlier, LTCG tax was levied at the rate of 10 per cent on profits made from MLD held for one year or more.

Also, under the rules applicable after April 1, 2023, income tax will have to be paid on the income from life insurance policies with an annual premium of more than Rs 5 lakh.

However, this rule will not apply to ULIP (Unit Linked Insurance Plan).

7. Rules for Senior Citizens

The government has increased the maximum investment limit in the Senior Citizen Savings Scheme for senior citizens i.e. people above 60 years of age from Rs 15 lakh to Rs 30 lakh from April 1, 2023.

Apart from this, the maximum deposit limit in the Monthly Income Scheme (MIS) for the elderly has also been increased from Rs 4.5 lakh to Rs 9 lakh for a single account and from Rs 7.5 lakh to Rs 15 lakh for a joint account.

8. Leave Encashment Limit

Non-government employees have been getting tax exemptions up to a limit on the amount received as leave encashment on retirement or leaving the job.

This limit was Rs 3 lakh since 2002, which has been increased to Rs 25 lakh this year.

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